Web Desk
The federal government has announced an increase in the Withholding Tax (WHT) on international credit card transactions from 1 percent to 5 percent in the fiscal year budget 2023-24. Additionally, the government has proposed an increase in the rate on the fee for offshore digital services from 10 percent to 15 percent under section 152(1C) of the relevant Ordinance.
Finance Minister Ishaq Dar, in his budget address, highlighted the need to increase foreign exchange reserves and address obstacles hindering progress in this area. To achieve this, the government aims to discourage the outflow of foreign currency through banking channels and credit/debit cards by raising the WHT on such transactions to 5 percent.
The objective of this step is to encourage the public to use documented banking channels, which are generally more secure, for their genuine foreign exchange requirements. Simultaneously, it aims to address loopholes that hinder the growth of foreign exchange reserves.
